Economics Lesson

The other day I paid a quick visit to VivaCred, a non-profit bank founded about 10 years ago under the auspices of VivaRio, perhaps the city's biggest and best-known agent for social change, to investigate ideas for a financial literacy class at the Instituto Dois Irmãos. I was first of all struck at how clean, orderly, and simply impressive of a space it was, the kind of quality in the building itself typically reserved for the few chain banks and pharmacies that have Rocinha branches.

But then again, VivaCred in Rocinha is its headquarters, where for almost ten years it has been lending small loans to businesses both formal and informal, à la the Grameen Bank and 2006 Nobel Laureate Mohammad Yunus. The staff member I spoke to very proudly told me that they do not survive off donations, but rather have been able to maintain their facility and staff while still offering new loans all with the interest revenue from successful old loans. The micro-credit/micro-finance concept is an intriguing, and in many ways logical one that ably breaks down a lot of stigmas and stereotypes about poor communities and their residents. I'm not surprised to find such an operation in Rocinha, indeed a little excited that they chose to headquarter it there, even after having branched out all over Rio (admittedly, with some support from the city government).

Rio, and Rocinha, being places of great contrast, I mused nonetheless on the competition between VivaCred and the boca-de-fumo in Valão that I passed on the way there & back from the Instituto. While I doubt the ADA specifically sees the revenue generated by new businesses in Rocinha as any kind of threat, in the grander scheme, what's bringing more money into Rocinha, what's the economic engine: drugs or businesses (both formal and informal)? I'm not sure there's a fair way to make the comparison, as the drugs of course supplement a display of power and the authority of a certain civil order that a league of merchants likely couldn't.

Patrick, a kid I met in Rocinha early in my stay, was able to rattle off a figure of how many reais per week pass through Rocinha in trafficking. Where he got the statistic and whether it had any validity was left unsaid. He claimed it was the most in Rio, another point of pride.

The future of Rocinha, and certainly many other favelas in Rio, likely runs in tandem between the communities' ability to create, grow, and maintain businesses and the factions' ability to do the same. But could more support for investment initiatives like VivaCred eventually undercut the factions' power if the community didn't feel like it was relying on them for a certain kind of economic stimulation in the neighborhood? I don't know if anyone's untangled the paths of where the money goes to or comes from, but it's certain the two are intertwined.